Solar inverter/module/cell prices are sinking

Firstly we should take all GOI pronouncements with a pinch of salt. If one were to analyses budgets versus actuals of any 5 year plan, we will be inclined to discount by 30-40% of the estimated Targets. I am not saying the potential does not exist. In fact the potential is much larger. But there are not enough sources at the ground-level to support a rapid development.

Secondly Technology is not static. We have seen that happening in the solar sector. There is talk of nanotechnology helping improve cell efficiency significantly. There are several technologies (including newer materials) that will help generate more energy and more efficiently than current technologies. We could see commercial launches in 2013 and 2014. That would unfortunately mean huge losses for the existing manufacturers.

Sinking inverter/module prices have already laid low several American and European players. Even Chinese manufacturers have lost heavily. Solar cells will ultimately become commodities with no brand having any significant USP. Those holding stocks in the hope prices will go up could be in for some serious shock. Solar is trending Computer hardware and those of us who have seen IBM 1401 being replaced by Ipads over the past 3 decades can see a more rapid technological obsolescence in the Solar hardware.

2013 could see serious volatility in global currencies. This is bound to affect prices for cross-border transactions. I expect distress sales in 2013.Actual user will benefit but manufacturers and Banks could bleed.

As regards BOS, there is already talking of deploying DC wherever practicable on a large scale instead of converting to AC using Inverters. Adaptation could take a little more time, but some Developers will learn to live without Inverters.

Unless the Solar industry lines up cash reserves and is able to move quickly, we could see many of the small players getting hurt or vanishing. It's only recently we are seeing forays by Hitachi, Siemens and other giants.

Solar has a long and stable future... but before that there will be a huge churn in the market.

The solar pv modules segment is now shaping up interestingly. As I have seen while the bigger players are trying to sell off their assets the smaller players are still betting on the long term. The long term will pay off as we can see that based on the NSM draft released by the govt. it plans to add more than 1GW every year. And we can see the potential for business for a module / inverter manufacturer. The focus till now has mostly been on modules, but if we look at the rest of the supply chain (of BOS) such as inverters, junction boxes etc they also have similar business potential.

Government policies will have some impact on solar module prices. Anti-damping regulations shield the Indian manufacturers from competition from China. China at this time have surplus inventory. Indian market although have tremendous opportunities, but return on investment is low. Module prices stabilization will creep slowly.

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